Driving Dystopias: GM Reportedly Rejoining the Insurance Racket With OnStar

Matt Posky
by Matt Posky
driving dystopias gm reportedly rejoining the insurance racket with onstar

General Motors is making moves to offer insurance plans under its data-focused OnStar connected services, which is convenient since the feature comes equipped on all new models the company sells inside North America. Participating customers will be required to allow the automaker to track their driving behavior in real-time. As a perk for handing over their right to privacy, GM will offer discounts to motorists that never exceed the speed limit or accidentally roll through a stop sign.

It’s part of a usage-based insurance trend that’s becoming increasingly common within the industry. It started years ago with customers agreeing to have insurers install tracking devices in their vehicles in exchange for lower rates — assuming they displayed what the agency deemed safe driving practices throughout the duration. But, now that cars are becoming connected to the internet, this can be done automatically with on-board technologies. Consumer advocacy groups are growing worried that insurers will eventually make vehicle tracking mandatory and use it as an excuse to issue predatory fees.

Frankly, so are we.

While asking if customers want to be voluntarily spied on is relatively new for GM, offering insurance to drivers is not. General Motors actually ran insurance programs for decades until it was required to abandon its GMAC financial-services division during its 2009 bankruptcy. That makes this a return to form in some respects, minus the egregious privacy concerns.

According to The Wall Street Journal, the manufacturer will launch a pilot program for the new OnStar Insurance for employees based in Arizona later this week. From there, GM intends to partner with American Family Insurance (to underwrite the policies) and launch the service nationally by the end of 2021. Rates are said to be calculated by the amount of driving a customer does and where that driving is taking place. But other factors (speeding, hard stops, etc) will also be taken into account. The automaker said rates could even be affected by the number of times a driver yanks on the emergency brake or whether or not they kept the tires properly inflated.

“Who knows more about your vehicle than the people who manufactured it?” Andrew Rose, president of GM’s freshly formed OnStar Insurance Services, told the outlet.

From WSJ:

So-called usage-based insurance policies have emerged as one of the more promising uses for connected-car data, analysts say. Insurance companies for years have been offering drivers discounts for good driving, relying on portable devices or smartphone apps to keep tabs on the car’s movements.

Some auto makers provide driving data to insurance companies to help connect their owners to better insurance rates, though few have gone a step further to offer their own plans. Tesla Inc. uses data from its cars to offer insurance to customers. Ford Motor Co. last month said it would give vehicle owners access to cheaper insurance by beaming data from the car to a data exchange used by many carriers to crunch rates.

The number of auto-insurance policies in North America that use digitally-logged data from the car is expected to grow to nearly 50 million in 2023, from about 10.6 million at the end of 2018, according to Berg Insight, a Sweden-based research firm.

It sounds like a dystopian nightmare but a multitude of automakers have been discussing ways to leverage the vast amount of driving data they’re now getting through connected vehicles. General Motors has probably been the company the most vocal about turning data into new sources of revenue, in fact. However, we think this is a bridge too far and look forward to the possibility of covering pitchfork-equipped mobs rallying outside the Detroit Renaissance Center.

[Image: Phil K/Shutterstock]

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  • JD-Shifty JD-Shifty on Nov 21, 2020

    I drive a 96 S-10 with 518k on it. Insurance for PLPD is 63 dollars for six months

  • JimC2 JimC2 on Nov 22, 2020

    You guys might be thinking about this the wrong way. Odds are they this wünder tattletale is going to be packaged with other safety nannies such as "intelligent" auto braking. Now I'm not going to tell you to aggressively brake check 2022 and newer upmarket GM vehicles that you see doing the speed limit +0/-10 in the left lane, but I bet if you cut in front closely (but *safely* closely) then it'll set off the adaptive cruise radar and trigger an aggressive deceleration event, which may drive up their insurance rates if it happens enough times. Together we are strong!

  • Jeff S I don't believe gm will die but that it will continue to shrink in product and market share and it will probably be acquired by a foreign manufacturer. I doubt gm lacks funds as it did in 2008 and that they have more than enough cash at hand but gm will not expand as it did in the past and the emphasis is more on profitability and cutting costs to the bone. Making gm a more attractive takeover target and cut costs at the expense of more desirable and reliable products. At the time of Farago's article I was in favor of the Government bailout more to save jobs and suppliers but today I would not be in favor of the bailout. My opinions on gm have changed since 2008 and 2009 and now I really don't care if gm survives or not.
  • Kwik_Shift I was a GM fan boy until it ended in 2013 when I traded in my Avalanche to go over to Nissan.
  • Stuart de Baker I didn't bother to read this article. I'll wait until a definitive headline comes out, and I'll be surprised if Tesla actually produces the Cybertruck. It certainly looks impractical for both snowy and hot sunny weather.
  • Stuart de Baker This is very interesting information. I was in no danger of buying a Tesla. I love my '08 Civic (stick), and it feels just as responsive as when I bought it 11 years ago with 35k on the clock (now 151k), and barring mishaps, I plan to keep it for the next 25 years or so, which would put me into my mid-90s, assuming I live that long. On your information, I will avoid renting Teslas.
  • RHD The only people who would buy this would be those convinced by a website that they are great, and order one sight-unseen. They would have to have be completely out of touch with every form of media for the last year. There might actually be a few of these people, but not very many. They would also have to be completely ignorant of the Hyundai Excel. (Vinfast seems to make the original Excel look like a Camry in comparison.)